Law:Northern Pipeline Act

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R.s.c., 1985, c. N-26

An Act to establish the Northern Pipeline Agency, to facilitate the planning and construction of a pipeline for the transmission of natural gas from Alaska and Northern Canada and to give effect to the Agreement between Canada and the United States of America on principles applicable to a Northern natural gas pipeline


Contents

Short Title

Short title

1. This Act may be cited as the Northern Pipeline Act.

1977-78, c. 20, s. 1.


Interpretation

Definitions

2. (1) In this Act,

“Administrator”

« Directeur »

“Administrator” means the Administrator of the Agency appointed or designated pursuant to subsection 6(2);

“Agency”

« Administration »

“Agency” means the Northern Pipeline Agency established by subsection 5(1);

“Agreement”

« Accord »

“Agreement” means the Agreement between Canada and the United States dated September 20, 1977, set out in Schedule I, and includes any exchange of notes between Canada and the United States amending Annex III of the Agreement to give effect to a report of the Board, dated February 17, 1978, in which the Board indicated it would include in its decision approving, pursuant to this Act, pipeline specifications, a requirement for a fifty-six inch diameter pipe with a maximum allowable operating pressure of 1,080 psi for that portion of the pipeline between Whitehorse, Yukon and Caroline, Alberta;

“Board”

« Office »

“Board” means the National Energy Board established under the National Energy Board Act;

“Commissioner”

« Directeur général »

“Commissioner” means the Commissioner of the Agency appointed pursuant to subsection 6(1);

“company”

« compagnie »

“company” means a company to which a certificate of public convenience and necessity is declared to be issued by subsection 21(1) in respect of the pipeline;

“designated officer”

« fonctionnaire désigné »

“designated officer” means the member of the Board who is designated under subsection 6(2) as Administrator or under subsection 6(4) as a deputy to the Administrator;

“Hearing”

« Audience »

“Hearing” means the hearings before the Board in respect of applications for certificates of public convenience and necessity for the construction and operation of certain natural gas pipelines that resulted in a publication of the Board under date of June, 1977 in three volumes entitled “Reasons for Decision, Northern Pipelines”;

class="MarginalNoteDef“Minister”

« ministre »

“Minister” means such member of the Queen’s Privy Council for Canada as is designated by the Governor in Council as the Minister for the purposes of this Act;

“pipeline”

« pipe-line »

“pipeline” means the pipeline for the transmission of natural gas from Alaska across Canada along the route set out in Annex I to the Agreement and includes all branches, extensions, tanks, reservoirs, storage facilities, pumps, racks, compressors, loading facilities, interstation systems of communication by telephone, telegraph or radio, and real and personal property and works connected therewith.

References

(2) For the purposes of this Act, a reference in this Act or in any schedule to this Act to the Foreign Investment Review Act, chapter 46 of the Statutes of Canada, 1973-74, or any provision of that Act shall be construed as a reference to that Act or provision as it read immediately before the coming into force of section 46 of the Investment Canada Act, chapter 20 of the Statutes of Canada, 1985.

R.S., 1985, c. N-26, s. 2; R.S., 1985, c. 28 (1st Supp.), s. 50; 2002, c. 7, s. 212(E).

Previous Version

Her Majesty

Binding on Her Majesty

3. This Act is binding on Her Majesty.

1977-78, c. 20, s. 2.


Objects

Objects

4. The objects of this Act are

(a) to carry out and give effect to the Agreement;

(b) to carry out, through the Agency, federal responsibilities in relation to the pipeline;

(c) to facilitate the efficient and expeditious planning and construction of the pipeline taking into account local and regional interests, the interests of the residents, particularly the native people, and recognizing the responsibilities of the Government of Canada and other governments, as appropriate, to ensure that any native claim related to the land on which the pipeline is to be situated is dealt with in a just and equitable manner;

(d) to facilitate, in relation to the pipeline, consultation and coordination with the governments of the provinces, Yukon and the Northwest Territories;

(e) to maximize the social and economic benefits from the construction and operation of the pipeline including the maximizing of the opportunities for employment of Canadians while at the same time minimizing any adverse effect on the social and environmental conditions of the areas most directly affected by the pipeline; and

(f) to advance national economic and energy interests and to maximize related industrial benefits by ensuring the highest possible degree of Canadian participation in all aspects of the planning and construction of, and procurement for, the pipeline while ensuring that the procurement of goods and services for the pipeline will be on generally competitive terms.

R.S., 1985, c. N-26, s. 4; 2002, c. 7, s. 213.

Previous Version

Part I. Northern Pipeline Agency

Establishment of Agency

Agency established

5. (1) There is hereby established an agency of the Government of Canada called the Northern Pipeline Agency over which the Minister shall preside.

Minister

(2) The Minister has the management and direction of the Agency.

1977-78, c. 20, s. 4.

Commissioner

6. (1) The Governor in Council may appoint an officer to be called the Commissioner of the Agency to be the deputy of the Minister and the Commissioner shall rank as and have all the powers of a deputy head of a department.

Administrator

(2) The Governor in Council may, by order,

(a) appoint an officer to be called the Administrator of the Agency; or

(b) designate one of the members of the Board to be the Administrator of the Agency.

Duties of Administrator

(3) The Administrator shall, under the Commissioner, exercise and perform such of the powers, duties and functions of the Minister under this Act as the Minister may specify.

Deputy to the Administrator

(4) Where the Governor in Council does not designate a member of the Board to be the Administrator, he may, by order, designate one of the members of the Board to be a deputy to the Administrator.

Residence and other requirements removed

(5) Subsections 3(5) and 4(3) of the National Energy Board Act do not apply to the member of the Board designated as Administrator or as a deputy to the Administrator.

1977-78, c. 20, s. 5.

Powers of designated officer

7. (1) The designated officer may, in respect of the pipeline, exercise and perform such of the powers, duties and functions of the Board under the National Energy Board Act, except those under Part II, sections 47 to 52, subsection 54(1), sections 56 and 58, Part IV, section 74, and Parts VI and VIII of that Act, as may be delegated to him by order of the Board.

Certification of documents

(2) The designated officer may, in respect of the pipeline, certify copies of

(a) the approved plan, profile and book of reference for the purpose of paragraph 31(d) of the National Energy Board Act; and

(b) any permit issued under subsection 41(2) of that Act.

1977-78, c. 20, s. 6; 1980-81-82-83, c. 80, s. 6.

National Energy Board

8. (1) Where a member of the Board is designated to be the Administrator or a deputy to the Administrator, the Governor in Council may appoint, on such terms and conditions as the Governor in Council may prescribe, a temporary substitute member of the Board in place of that member of the Board.

(2)�(Repealed, 1993, c. 34, s. 97)

R.S., 1985, c. N-26, s. 8; 1993, c. 34, s. 97.

Acting Commissioner or Administrator

9. (1) Subject to subsection (2), in the event of the absence or incapacity of the Commissioner or Administrator or if either office is vacant, the Governor in Council may designate a person to act as Commissioner or Administrator for the time being and the person so designated has all the powers, duties and functions of the Commissioner or Administrator, unless the Governor in Council specifies otherwise.

Acting designated officer

(2) Where the designated officer is absent or incapacitated, the Governor in Council may designate another member of the Board to act as the Administrator or as a deputy to the Administrator, as the case may be, and the person so designated has all the powers, duties and functions of the Administrator or that deputy including the powers, duties and functions of the Board that were delegated to the Administrator or that deputy, unless the Governor in Council specifies otherwise.

Residence and other requirements removed

(3) Subsections 3(5) and 4(3) of the National Energy Board Act do not apply to a member of the Board designated pursuant to subsection (2).

1977-78, c. 20, s. 8.

Powers of Minister

10. The Minister may

(a) exercise such of the powers and carry out such of the duties and functions, in relation to the pipeline only, of any member of the Queen’s Privy Council for Canada or any department or agency of the Government of Canada as are from time to time transferred to him by order of the Governor in Council;

(b) hold consultations with the governments of the provinces, Yukon and the Northwest Territories to coordinate and review the activities of the Agency and those governments in relation to the pipeline;

(c) enter into such agreements with the government of a province, or with the government of Yukon or the Northwest Territories after consultation with the Legislature of Yukon or the Commissioner in Council of the Northwest Territories, as may be necessary to facilitate the attainment of the objects of this Act and to provide for coordination and review of the activities of the Agency and those governments in relation to the pipeline;

(d) oversee and survey all aspects of the planning and construction of, and procurement for, the pipeline; and

(e) in order to carry out the obligations of Canada contained in the Agreement, consult with the appropriate authorities of the United States on any matter arising under the Agreement.

R.S., 1985, c. N-26, s. 10; 2002, c. 7, s. 214.

Previous Version

Offices

Offices

11. Offices of the Agency may be established at such places in Canada as the Minister considers appropriate.

1977-78, c. 20, s. 10.


Staff

Separate employer

12. (1) The Agency may employ such professional, scientific, technical and other officers and employees as it considers necessary for the purposes of this Act, fix their tenure of employment and their duties and, with the approval of the Treasury Board, fix and pay their remuneration.

Technical assistance

(2) The Agency may engage on a temporary basis the services of persons having technical or specialized knowledge to advise and assist the Agency in the performance of its duties and, with the approval of the Treasury Board, may fix and pay the remuneration and expenses of those persons.

Public Service Superannuation Act

(3) Each person employed under subsection (1) is deemed to be employed in the public service for the purposes of the Public Service Superannuation Act.

Application of other Acts

(4) Each person employed under subsection (1) is deemed to be employed in the federal public administration for the purposes of the Government Employees Compensation Act and any regulations made pursuant to section 9 of theAeronautics Act.

Secondment and advice and assistance

(5) The Governor in Council may, on the request of the Minister, direct any department or agency of the Government of Canada to second to the Agency, for specified periods, officers and employees necessary for the proper conduct of the work of the Agency and the Agency may, subject to any provisions relating to privileged information in any other Act, obtain the advice and assistance of any department or agency of the Government of Canada.

R.S., 1985, c. N-26, s. 12; 2003, c. 22, ss. 224(E), 225(E).

Previous Version

Audit and Annual Report

Audit

13. The accounts and financial transactions of the Agency shall be audited annually by the Auditor General of Canada and a report thereon shall be made to the Minister.

1977-78, c. 20, s. 12.

Annual report

14. The Minister shall, on or before December 31 next following the end of each fiscal year, prepare a report relating to the operations of the Agency for that fiscal year and the Minister shall cause the report, together with the report referred to in section 13, to be laid before Parliament on that date or, if Parliament is not then sitting, on any of the first fifteen days that either House of Parliament is sitting thereafter.

1977-78, c. 20, s. 13.


Transfer of Powers

Transfer of powers

15. The Governor in Council may, by order, transfer to the Minister, in relation to the pipeline only, such of the powers, duties and functions of any member of the Queen’s Privy Council for Canada or any department or agency of the Government of Canada as are specified in the order.

1977-78, c. 20, s. 14.

Exercise of powers by departments and other agencies

16. The Minister may, to facilitate the exercise of such of the powers and the carrying out of such of the duties and functions of a member of the Queen’s Privy Council for Canada or any department or agency of the Government of Canada as are transferred to him, enter into an agreement with the member, department or agency whereby the member, department or agency will exercise the powers and carry out the duties and functions so transferred in a manner determined in the agreement.

1977-78, c. 20, s. 15.

No taxing authority transferred

17. No transfer of any power, duty or function under section 15 authorizes the Minister to levy a tax or impose a licence fee or other monetary charge greater than the tax, licence fee or other monetary charge set out in the Act or regulations referred to in the transfer.

1977-78, c. 20, s. 16.


Federal-Provincial Consultative Council

Council to be established

18. (1) For the purpose of carrying out the objects of this Act, the Governor in Council may establish a Federal-Provincial Consultative Council consisting of

(a) the Commissioner and a representative of Yukon named by the Governor in Council on the recommendation of the Legislature of Yukon; and

(b) one representative of each of the provinces of British Columbia, Saskatchewan and Alberta nominated by the Lieutenant Governor in Council of each of those provinces.

Meeting and objects

(2) The Council established under subsection (1) shall meet at least once every three months at such places in Canada as may be determined by the Council to consult on and to facilitate the coordination of the actions of the Agency, the governments of the provinces referred to in paragraph (1)(b), the government of Yukon and other governmental bodies in relation to the pipeline, and in particular with a view to ensuring a consistent approach in so far as is possible relating to the pipeline.

Committees of Council

(3) The Council established by subsection (1) may establish committees of the Council to advise it on such matters relating to the objects set out in subsection (2) as the Council refers to those committees.

R.S., 1985, c. N-26, s. 18; 2002, c. 7, s. 215.

Previous Version

Advisory Councils

Establishment and composition

19. (1) For the purpose of assisting the Minister in carrying out the objects of this Act, the Governor in Council shall establish and set the terms of reference of one or more advisory councils each consisting of not more than ten members to be selected from outside the federal public administration and appointed by the Governor in Council to hold office for such term as the Governor in Council may determine.

Yukon Advisory Council

(2) One of the advisory councils established under subsection (1) shall be the Yukon Advisory Council with members representative of areas and interests, including native interests, in Yukon.

Functions

(3) The Commissioner shall inform a council established under subsection (1) of the activities of the Agency relating to the terms of reference of the council and any such council may advise and make recommendations to the Commissioner respecting those activities.

Council members

(4) Each member of a council established under subsection (1) is entitled to be paid out of the funds appropriated for the Agency such fees as are fixed by the Governor in Council for attendance at meetings of the council.

Expenses

(5) Each member of a council established under subsection (1) is entitled to be paid out of the funds appropriated for the Agency reasonable travel and living expenses incurred by him in connection with the performance of his duties under this Act while absent from his ordinary place of residence.

R.S., 1985, c. N-26, s. 19; 2002, c. 7, s. 216; 2003, c. 22, s. 224(E).

Previous Version

National Energy Board

Directions to the Board

20. (1) The Governor in Council may, by order, in respect of the pipeline, give directions to the Board respecting the exercise of the powers of the Board under, or the performance of the duties and functions imposed on the Board by, the National Energy Board Act and this Act and the Board shall comply with those directions.

Directions to designated officer

(2) The Governor in Council may, by order, in respect of the pipeline, give directions to the designated officer respecting the exercise of the powers and the performance of the duties and functions of the Board delegated to him by the Board under section 7 or imposed on him by this Act and the designated officer shall comply with those directions.

1977-78, c. 20, s. 19.


Certificates

Certificate issued

21. (1) A certificate of public convenience and necessity in respect of the pipeline is hereby declared to be issued to each company listed in Schedule II for that portion of the route indicated in the Agreement in respect of that company.

Certificate deemed to be issued by Board

(2) A certificate of public convenience and necessity declared to be issued by subsection (1) is deemed to be a certificate issued pursuant to section 52 of the National Energy Board Act.

Terms and conditions

(3) Every certificate declared to be issued by subsection (1) is subject to the terms and conditions set out in Schedule III.

Amendments of terms and conditions

(4) The Board or the designated officer may rescind, amend or add to the terms and conditions set out in Schedule III or deemed to be set out therein but no rescission of or amendment to such a term or condition or addition of a term or condition is effective without the approval of the Governor in Council.

Application of Foreign Investment Review Act

(5) Where any question arises under Schedule III whether a person is or is not a non-eligible person within the meaning of the Foreign Investment Review Act, chapter 46 of the Statutes of Canada, 1973-74, that person shall apply under subsection 4(1) of that Act for a statement in writing from the Minister referred to in that subsection to the effect that the person is not a non-eligible person within the meaning of that Act and that Minister shall deal with the application in the same manner as if it were an application for an opinion pursuant to a question arising under that Act, and any statement in writing furnished by that Minister is binding in accordance with that subsection but only for the purposes of this Act.

Shareholder agreement not to be amended

(6) Every certificate of public convenience and necessity declared to be issued by this Act is subject to the condition that Westcoast Transmission Company Limited, Alberta Gas Trunk Line Company Limited and Foothills Pipe Lines (Yukon) Ltd. shall not, without the prior approval of the Governor in Council and the Board, terminate, alter or amend the shareholders agreement entered into by those companies dated August 4, 1977 as amended prior to February 3, 1978.

1977-78, c. 20, s. 20.

Powers of designated officer

22. (1) The designated officer may, with the concurrence of the Minister, issue such orders and directions to the companies and grant such approvals to them as may be necessary to carry out the terms and conditions set out in Schedule III.

Deemed undertakings

(2) Every undertaking given by Foothills Pipe Lines (Yukon) Ltd., the Alberta Gas Trunk Line (Canada) Limited, Westcoast Transmission Company Limited and Alberta Natural Gas Company Ltd. and in the submission of the Alberta Gas Trunk Line Company Limited to the Board, as amended during the Hearing, is deemed to be

(a) an undertaking of every company in so far as the undertaking relates to the company and to the portion of the route indicated in the Agreement in respect of that company; and

(b) a term or condition set out in Schedule III.

1977-78, c. 20, s. 21.

Publication and report

23. A direction issued by the Governor in Council under subsection 20(1) or (2) or an approval under subsection 21(4) shall be published forthwith in the Canada Gazette and the Minister shall cause a copy of the direction or approval to be laid before Parliament on any of the first fifteen days that either House of Parliament is sitting after the direction or approval is given.

1977-78, c. 20, s. 22.


Judicial Matters

Decision or order final

24. (1) A decision or order of the Board in relation to the pipeline is valid and effective, final and conclusive and, except as provided in subsection (2), no such decision or order or any proceeding of the Board resulting in the issue of such a decision or order is subject to any proceeding by way of appeal or review in any court or to be questioned, enjoined, prohibited, removed, restrained, set aside or otherwise affected by any such proceeding.

Judicial review

(2) Where a person is directly affected by a decision or order of the Board in relation to the pipeline, that person may apply for a review of the decision or order under the Federal Courts Act by filing a notice of the application in the Federal Court of Appeal within thirty days after the decision or order is made or within such further time as the Court or a judge thereof may, either before or after the expiration of those thirty days, fix or allow.

R.S., 1985, c. N-26, s. 24; 1990, c. 8, s. 59; 2002, c. 8, s. 182.

Previous Version

Native Claims

Native claims unaffected

25. Notwithstanding this Act, any native claim, right, title or interest that the native people of Canada may have had prior to April 13, 1978 in and to the land on which the pipeline will be situated continues to exist until a settlement in respect of any such claim, right, title or interest is effected.

1977-78, c. 20, s. 23.1.


Penalties

Notice of failure to comply

26. (1) Where a company fails to comply with

(a) a term or condition of a certificate of public convenience and necessity declared to be issued by subsection 21(1), or

(b) an order or direction issued by the Board or the designated officer in relation to such a certificate,

the designated officer may

(c) give the company written notice of the failure and set, in the notice, a time within which the company shall comply with the term or condition or order or direction, and

(d) cause the notice to be served on the company by registered mail or in person.

Penalty

(2) Where, pursuant to subsection (1), the designated officer gives the company notice of failure to comply and the company fails, within the time set out in the notice and without lawful excuse, to comply with the term or condition or order or direction, set out in the notice, the Minister may issue an assessment against the company imposing a penalty, not exceeding ten thousand dollars for each day during which the failure continues, on the company.

Notice of assessment

(3) Where the Minister issues an assessment under subsection (2) against a company, he shall cause a notice of the assessment to be served forthwith on the company and notice thereof to be published in the Canada Gazette.

Objection

(4) A company that objects to an assessment under subsection (2) may, within thirty days from the day of mailing of the notice of assessment, serve on the Minister a notice of objection, in duplicate, in such form as the Governor in Council may prescribe setting out the reason for the objection and the relevant facts.

Service

(5) A notice of assessment under subsection (3) and a notice of objection under subsection (4) shall be served by being sent by registered mail.

Representation

(6) On receipt of a notice of objection under subsection (4) from a company, the Minister shall, with all due dispatch, reconsider the assessment objected to and vacate, confirm or vary the assessment and he shall thereupon notify the company of his action by registered mail.

1977-78, c. 20, s. 26.

Right of appeal

27. (1) Where a company receives a notice referred to in subsection 26(6), the company may, within thirty days after receipt of the notice and without serving a notice of objection to the action taken by the Minister under that subsection, appeal the action to the Federal Court.

Institution of appeal

(2) An appeal to the Federal Court under subsection (1) shall be instituted in the manner set out in section 48 of the Federal Courts Act.

Burden of proof

(3) In an appeal under this section, the burden of establishing the facts justifying the assessment of the penalty is on the Minister.

Disposal of appeal

(4) The Federal Court may dispose of an appeal under this section by

(a) allowing it;

(b) dismissing it; or

(c) dismissing it and varying the penalty but, in varying the penalty, the Federal Court shall not increase the penalty beyond the maximum penalty permitted by section 26.

R.S., 1985, c. N-26, s. 27; 2002, c. 8, ss. 182, 183.

Previous VersionDebt due Her Majesty

28. A penalty payable under this Act is a debt due to Her Majesty in right of Canada and is recoverable as such in the Federal Court or any other court of competent jurisdiction.

1977-78, c. 20, s. 28.


Cost Recovery

Costs of Agency to be recovered

29. (1) Every certificate of public convenience and necessity declared to be issued by this Act to a company is subject to the condition that the company shall pay to the Receiver General an amount, determined in accordance with any regulations made under section 24.1 of the National Energy Board Act in respect of the costs incurred by the Agency and the Board

(a) during the period commencing on April 13, 1978 and ending one year after the day on which leave to open the last section or part of the pipeline is given by the Board; and

(b) in overseeing and surveying the planning and construction of, and procurement for, the pipeline and in ensuring compliance with the terms and other conditions to which the certificate is subject.

Modifications of cost recovery regulations under National Energy Board Act

(2) For the purposes of subsection (1), in applying any regulations made under section 24.1 of the National Energy Board Act, the term “Agency” or “Agency and the Board” or “Agency or the Board” shall be substituted for the term “Board” as the circumstances require and a reference to a certificate issued under the National Energy Board Act shall be read as a reference to a certificate of public convenience and necessity declared to be issued by this Act.

R.S., 1985, c. N-26, s. 29; 1993, c. 34, s. 98.

Where Minister may perform terms and conditions

30. (1) Where a company fails or refuses to comply with a term or condition to which the certificate of public convenience and necessity declared to be issued to it is subject or with an order or direction issued to it pursuant to subsection 22(1), the Minister may, after thirty days notice of his intention to do so, take all reasonable measures, or direct any person he considers qualified to do so to take such measures, as are required to perform the term or condition or carry out the order or direction, unless within the thirty days the company has complied with the term or condition or order or direction, as the case may be, or has made arrangements that are satisfactory to the Minister to comply with the term or condition or order or direction.

Access to property

(2) Where, pursuant to subsection (1), the Minister or another person undertakes the performance of a term or condition or the carrying out of an order or direction, the Minister or that other person may enter and have access through any place or property and may do all reasonable things in order to perform the term or condition or carry out the order or direction.

Personal liability

(3) The Minister or any person he directs, pursuant to subsection (1), to perform a term or condition or carry out an order or direction is not personally liable civilly or criminally in respect of any act or omission in the course of performing the relevant term or condition or carrying out the order or direction under that subsection unless it is shown that he did not act reasonably.

Liability to Her Majesty

(4) Where, pursuant to subsection (1), the Minister or any person he directs to perform a term or condition or carry out an order or direction takes such reasonable measures as are required to perform the term or condition or carry out the order or direction that a company has failed or refused to comply with, the company is liable for all costs and expenses connected therewith incurred by Her Majesty in right of Canada to the extent that those costs and expenses can be established to have been reasonably incurred in the circumstances.

Procedure

(5) A claim under this section against a company may be sued for and recovered by Her Majesty in right of Canada with costs in proceedings brought or taken therefor in the name of Her Majesty in that right in any court of competent jurisdiction.

Limitation

(6) No proceedings in respect of a claim under this section may be commenced after two years from the time the Minister or any person he directed, pursuant to subsection (1), to perform a term or condition or carry out an order or direction completed such reasonable measures as were required to perform the term or condition or carry out the order or direction that the company failed or refused to comply with.

1977-78, c. 20, s. 30.


Part Ii. Traffic, Tolls And Tariffs

Application

Application

31. (1) Part IV of the National Energy Board Act, as modified by this Part, applies to every company and where there is any conflict between this Part and the National Energy Board Act, this Part prevails.

Single tariff

(2) Where, in the opinion of the Board, it is desirable that a single tariff be established in Canada in respect of the pipeline, the Board may, on application of Foothills Pipe Lines (Yukon) Ltd. or on its own motion, by order, require Foothills Pipe Lines (Yukon) Ltd. to file such a tariff and, where the Board does so, Foothills Pipe Lines (Yukon) Ltd. is deemed to be a company for the purposes of this Part and Part IV of the National Energy Board Act and every other company is relieved from any obligation to file a tariff until the Board rescinds that order.

1977-78, c. 20, s. 31.


Consultation

Consultation with United States regulatory authorities

32. The Board may, in order to carry out the obligation set out in paragraph 9 of the Agreement, consult with the appropriate regulatory authority of the United States with respect to matters set out in the Agreement.

1977-78, c. 20, s. 32.


Tolls and Tariffs

Board to apply Agreement

33. The Board shall, in fixing the tolls and tariffs of a company, apply the requirements of the Agreement, in particular the requirements of paragraphs 4, 5, 6, 11 and 12 thereof, and shall include in its determination of an appropriate toll and tariff any amounts, not exceeding the maximum amounts set out in the Agreement, paid by the company on account of the Yukon road allowance and Yukon property tax.

1977-78, c. 20, s. 33.

Rate of return

34. The Board shall, in determining an appropriate rate of return on equity investment in a company,

(a) take into account

(i) the capital cost estimates set out in the Agreement, and

(ii) the extent to which variations in actual costs from the estimates referred to in subparagraph (i) were within or outside the control of the company;

(b) establish a rate of return, taking into account the factors set out in paragraph (a), that is not detrimental, when taken into account with the rate of return of every other company, to the financing of the Dempster Line described in the Agreement; and

(c) comply with such regulations as the Governor in Council may make prescribing or otherwise relating to the manner of calculating the rate of return.

1977-78, c. 20, s. 34.

Prior approval

35. Where a company files a tariff at the time the financing of the pipeline is being considered, the Board may approve the form and content of the tariff and the rate of return on the equity investment of the company.

1977-78, c. 20, s. 35.


Regulations

Regulations

36. The Governor in Council may make such regulations under this Part in respect of tolls and tariffs as may be necessary to give effect to the Agreement including regulations prescribing or otherwise relating to the manner of calculating an appropriate rate of return on equity investment of a company and the methods of applying the incentive scheme set out in subparagraph 4(b) of the Agreement.

1977-78, c. 20, s. 36.


Part Iii. Real Property

Commissioner’s lands

37. (1) If the Governor in Council is of the opinion that lands in Yukon are required temporarily or otherwise for the construction, maintenance or operation of the pipeline including, without limiting the generality of the foregoing, lands required for camps, roads and other related works, the Governor in Council may, by order, after consultation with the member of the Executive Council of Yukon who is responsible for the lands, take the administration and control of them from the Commissioner and transfer the administration of those lands to the Minister.

Company to provide plans of lands required

(2) Foothills Pipe Lines (South Yukon) Ltd. shall provide the Minister with a copy of all plans, profiles and books of reference certified by the designated officer pursuant to subsection 7(2) showing the real property in Yukon vested in Her Majesty in right of Canada that are required to permit construction of the pipeline.

Grant of easement to company

(3) Where Foothills Pipe Lines (South Yukon) Ltd. provides the Minister with a copy of the plans, profiles and books of reference referred to in subsection (2), the Governor in Council may authorize, on such terms and conditions as he considers appropriate, the grant of an easement to Foothills Pipe Lines (South Yukon) Ltd. for the construction of the pipeline and, on the giving of leave to open the last section or part of the pipeline by the Board and subject to subsection (4), for the purpose of the operation and maintenance thereof.

Company to file plan of survey

(4) Within two years after leave to open the last section or part of the pipeline has been given by the Board or any further period, not exceeding six months, that the Governor in Council may approve, Foothills Pipe Lines (South Yukon) Ltd. shall send to the Surveyor General at Ottawa a plan of survey under Part II of the Canada Lands Surveys Act, for confirmation by the Surveyor General under that Act, as an official plan in respect of lands in Yukon vested in Her Majesty in right of Canada required for the maintenance and operation of the pipeline.

R.S., 1985, c. N-26, s. 37; 1991, c. 50, s. 34; 1998, c. 14, s. 101(F); 2002, c. 7, s. 217.

Previous Version

Part Iv. General

Offences

Offences

38. (1) Every person who wilfully and without lawful excuse fails to comply with

(a) a term or condition of a certificate of public convenience and necessity declared to be issued by subsection 21(1),

(b) an order issued by the Board or the designated officer in relation to such a certificate, or

(c) any other provision of this Act,

is guilty of an offence and liable on summary conviction to a fine not exceeding ten thousand dollars.

Officers, etc., of companies

(2) Where a company commits an offence under this Act, any officer, director or agent of the company who directed, authorized, assented to, acquiesced in or participated in the commission of the offence is a party to and guilty of the offence and is liable on conviction to the punishment provided for the offence whether or not the company has been prosecuted or convicted.

Continuing offence

(3) Where an offence under this Act is committed or continued on more than one day, it shall be deemed to be a separate offence for each day on which the offence is committed or continued.

Limitation

(4) Proceedings in respect of an offence under this Act may be instituted at any time within one year of the time the subject-matter of the proceedings arose.

Consent of Attorney General of Canada

(5) Proceedings in respect of an offence under this Act may not be instituted without the consent of the Attorney General of Canada.

1977-78, c. 20, s. 43.


Transitional

Transitional

39. When Part I, except sections 21, 29 and 30, ceases to be in force, any power given to the Minister, the Agency or the designated officer with respect to a certificate of public convenience and necessity declared to be issued by this Act is transferred to the Board.

1977-78, c. 20, s. 44.


Termination of Part I

Part I ceases to apply

40. (1) Subject to subsection (2), section 4 and Part I, except sections 21, 29 and 30, cease to be in force one year after the day on which leave to open the last section or part of the pipeline is given by the Board.

Extension of Act

(2) Where, prior to the day on which leave to open the last section or part of the pipeline is given by the Board, a certificate of public convenience and necessity is issued for the construction of the lateral pipeline to transmit northern Canadian gas, referred to in the Agreement as the Dempster Line, and both Houses of Parliament, by joint resolution, direct that section 4 and that part of Part I that would cease to be in force under subsection (1) shall continue in force with such amendments as are provided in that resolution, section 4 and that part of Part I as amended by the joint resolution continue in force in accordance with that joint resolution.

1977-78, c. 20, s. 45.

Schedule I

(Section 2)

Agreement Between Canada And The United States Of America On Principles Applicable To A Northern Natural Gas Pipeline

The Government of Canada and the Government of the United States of America,

DESIRING to advance the national economic and energy interests and to maximize related industrial benefits of each country, through the construction and operation of a pipeline system to provide for the transportation of natural gas from Alaska and from Northern Canada,

Hereby agree to the following principles for the construction and operation of such a system:

1. Pipeline Route

The construction and operation of a pipeline for the transmission of Alaskan natural gas will be along the route set forth in Annex I, such pipeline being hereinafter referred to as “the Pipeline”. All necessary action will be taken to authorize the construction and operation of the Pipeline in accordance with the principles set out in this Agreement.

2. Expeditious Construction; Timetable

(a) Both Governments will take measures to ensure the prompt issuance of all necessary permits, licenses, certificates, rights-of-way, leases and other authorizations required for the expeditious construction and commencement of operation of the Pipeline, with a view to commencing construction according to the following timetable:

— Alaska — January 1, 1980

— Yukon — main line pipe laying January 1, 1981

— Other construction in Canada to provide for timely completion of the Pipeline to enable initial operation by January 1, 1983.

(b) All charges for such permits, licenses, certificates, rights-of-way, leases and other authorizations will be just and reasonable and apply to the Pipeline in the same non-discriminatory manner as to any other similar pipeline.

(c) Both Governments will take measures necessary to facilitate the expeditious and efficient construction of the Pipeline, consistent with the respective regulatory requirements of each country.

3. Capacity of Pipeline and Availability of Gas

(a) The initial capacity of the Pipeline will be sufficient to meet, when required, the contractual requirements of United States shippers and of Canadian shippers. It is contemplated that this capacity will be 2.4 billion cubic feet per day (bcfd) for Alaska gas and 1.2 bcfd for Northern Canadian gas. At such time as a lateral pipeline transmitting Northern Canadian gas, hereinafter referred to as “the Dempster Line”, is to be connected to the Pipeline or at any time additional pipeline capacity is needed to meet the contractual requirements of United States or Canadian shippers, the required authorizations will be provided, subject to regulatory requirements, to expand the capacity of the Pipeline in an efficient manner to meet those contractual requirements.

(b) The shippers on the Pipeline will, upon demonstration that an amount of Canadian gas equal on a British Thermal Unit (BTU) replacement value basis will be made available for contemporaneous export to the United States, make available from Alaska gas transmitted through the Pipeline, gas to meet the needs of remote users in the Yukon and in the provinces through which the Pipeline passes. Such replacement gas will be treated as hydrocarbons in transit for purposes of the Agreement between the Government of Canada and the Government of the United States of America concerning Transit Pipelines, hereinater referred to as “the Transit Pipeline Treaty”. The shippers on the Pipeline will not incur any cost for provision of such Alaska gas except those capital costs arising from the following provisions:

(i) the owner of the Pipeline in the Yukon will make arrangements to provide gas to the communities of Beaver Creek, Burwash Landing, Destruction Bay, Haines Junction, Whitehorse, Teslin, Upper Liard and Watson Lake at a total cost to the owner of the Pipeline not to exceed Canadian $2.5 million;

(ii) the owner of the Pipeline in the Yukon will make arrangements to provide gas to such other remote communities in the Yukon as may request such gas within a period of two years following commencement of operation of the Pipeline at a cost to the owner not to exceed the product of Canadian $2,500 and the number of customers in the communities, to a maximum total cost of Canadian $2.5 million.

4. Financing

(a) It is understood that the construction of the Pipeline will be privately financed. Both Governments recognize that the companies owning the Pipeline in each country will have to demonstrate to the satisfaction of the United States or the Canadian Government, as applicable, that protections against risks of non-completion and interruption are on a basis acceptable to that Government before proof of financing is established and construction allowed to begin.

(b) The two Governments recognize the importance of constructing the Pipeline in a timely way and under effective cost controls. Therefore, the return on the equity investment in the Pipeline will be based on a variable rate of return for each company owning a segment of the Pipeline, designed to provide incentives to avoid cost overruns and to minimize costs consistent with sound pipeline management. The base for the incentive program used for establishing the appropriate rate of return will be the capital costs used in measuring cost overruns as set forth in Annex III.

(c) It is understood that debt instruments issued in connection with the financing of the Pipeline in Canada will not contain any provision, apart from normal trust indenture restrictions generally applicable in the pipeline industry, which would prohibit, limit or inhibit the financing of the construction of the Dempster Line; nor will the variable rate of return provisions referred to in subparagraph (b) be continued to the detriment of financing the Dempster Line.

5. Taxation and Provincial Undertakings

(a) Both Governments reiterate their commitments as set forth in the Transit Pipeline Treaty with respect to non-discriminatory taxation, and take note of the statements issued by the Governments of the Provinces of British Columbia, Alberta and Saskatchewan, attached hereto as Annex V, in which those Governments undertake to ensure adherence to the provisions of the Transit Pipeline Treaty with respect to non-interference with throughput and to non-discriminatory treatment with respect to taxes, fees or other monetary charges on either the Pipeline or throughput.

(b) With respect to the Yukon Property Tax imposed on or for the use of the Pipeline the following principles apply:

(i) The maximum level of the property tax, and other direct taxes having an incidence exclusively, or virtually exclusively, on the Pipeline, including taxes on gas used as compressor fuel, imposed by the Government of the Yukon Territory or any public authority therein on or for the use of the Pipeline, herein referred to as “the Yukon Property Tax”, will not exceed $30 million Canadian per year adjusted annually from 1983 by the Canadian Gross National Product price deflator as determined by Statistics Canada, hereinafter referred to as the GNP price deflator.

(ii) Fr the period beginning January 1, 1980, and ending on December 31 of the year in which leave to open the Pipeline is granted by the appropriate regulatory authority, the Yukon Property Tax will not exceed the following:

1980 — $5 million Canadian

1981 — $10 million Canadian

1982 — $20 million Canadian

Any subsequent year to which this provision applies — $25 million Canadian.

(iii) The Yukon Property Tax formula described in subparagraph (i) will apply from January 1 after the year in which leave to open the Pipeline is granted by the appropriate regulatory authority until the date that is the earlier of the following, hereinafter called the tax termination date:

(A) December 31, 2008, or

(B) December 31 of the year in which leave to open the Dempster Line is granted by the appropriate regulatory authority.

(iv) Subject to subparagraph (iii), if for the year ending on December 31, 1987, the percentage increase of the aggregate per capita revenue derived from all property tax levied by any public authority in the Yukon Territory (excluding the Yukon Property Tax) and grants to municipalities and Local Improvement Districts from the Government of the Yukon Territory, as compared to the aggregate per capita revenue derived from such sources for 1983, is greater than the percentage increase for 1987 of the Yukon Property Tax as compared to the Yukon Property Tax for 1983, the maximum level of the Yukon Property Tax for 1987 may be increased to equal the amount it would have reached had it increased over the period at the same rate as the aggregate per capita revenue.

(v) If for any year in the period commencing January 1, 1988, and ending on the tax termination date, the annual percentage increase of the aggregate per capita revenue derived from all property tax levied by any public authority in the Yukon Territory (excluding the Yukon Property Tax) and grants to municipalities and Local Improvement Districts from the Government of the Yukon Territory as compared to the aggregate per capita revenue derived from such sources for the immediately preceding year exceeds the percentage increase for that year of the Yukon Property Tax as compared to the Yukon Property Tax for the immediately preceding year, the maximum level of the Yukon Property Tax for that year may be adjusted by the percentage increase of the aggregate per capita revenue in place of the percentage increase that otherwise might apply.

(vi) The provisions of subparagraph (i) will apply to the value of the Pipeline for the capacities contemplated in this Agreement. The Yukon Property Tax will increase for the additional facilities beyond the aforesaid contemplated capacity in direct proportion to the increase in the gross asset value of the Pipeline.

(vii) In the event that between the date of this Agreement and January 1, 1983, the rate of the Alaska property tax on pipelines, taking into account the mill rate and the method of valuation, increases by a percentage greater than the cumulative percentage increase in the Canadian GNP deflator over the same period, there may be an adjustment on January 1, 1983, to the amount of $30 million Canadian described in subparagraph (i) of the Yukon Property Tax to reflect this difference. In defining the Alaska property tax for purposes of this Agreement, the definition of the Yukon Property Tax will apply mutatis mutandis.

(viii) In the event that, for any year during the period described in subparagraph (iii), the annual rate of the Alaska property tax on or for the use of the Pipeline in Alaska increases by a percentage over that imposed for the immediate preceding year that is greater than the increase in percentage of the Yukon Property Tax for the year, as adjusted, from that applied to the immeditely preceding year, the Yukon Property Tax may be increased to reflect the percentage increase of the Alaska property tax.

(ix) It is understood that indirect socio-economic costs in the Yukon Territory will not be reflected in the cost of service to the United States shippers other than through the Yukon Property Tax. It is further understood that no public authority will require creation of a special fund or funds in connection with construction of the Pipeline in the Yukon, financed in a manner which is reflected in the cost of service to U.S. shippers, other than through the Yukon Property Tax. However, should public authorities in the State of Alaska require creation of a special fund or funds, financed by contributions not fully reimbursable, in connection with construction of the Pipeline in Alaska, the Governments of Canada or the Yukon Territory will have the right to take similar action.

(c) The Government of Canada will use its best endeavors to ensure that the level of any property tax imposed by the Government of the Northwest Territories on or for the use of that part of the Dempster Line that is within the Northwest Territories is reasonably comparable to the level of the property tax imposed by the Government of the Yukon Territory on or for the use of that part of the Dempster Line that is in the Yukon.

6. Tariffs and Cost Allocation

It is agreed that the following principles will apply for purposes of cost allocation used in determining the cost of service applicable to each shipper on the Pipeline in Canada:

(a) The Pipeline in Canada and the Dempster Line will be divided into zones as set forth in Annex II. Except for fuel and except for Zone 11 (the Dawson-Whitehorse portion of the Dempster Line), the cost of service to each shipper in each zone will be determined on the basis of volumes as set forth in transportation contracts. The volumes used to assign these costs will reflect the original BTU content of Alaskan gas for U.S. shippers and Northern Canadian gas for Canadian shippers, and will make allowance for the change in heat content as the result of commingling. Each shipper will provide volumes for line losses and line pack in proportion to the contracted volumes transported in the zone. Each shipper will provide fuel requirements in relation to the volume of his gas being carried and to the content of the gas as it affects fuel consumption.

(b) It is understood that, to avoid increased construction and operating costs for the transportation of Alaskan gas, the Pipeline will follow a southern route through the Yukon along the Alaska Highway rather than a northern route through Dawson City and along the Klondike Highway. In order to provide alternative benefits for the transportation of Canadian gas to replace those benefits that would have been provided by the northern route through Dawson City, U.S. shippers will participate in the cost of service in Zone 11. It is agreed that if cost overruns on construction of the Pipeline in Canada do not exceed filed costs set forth in Part (iii)* of Annex III by more than 35 percent, U.S. shippers will pay the full cost of service in Zone 11. U.S. shipper participation will decline if overruns on the Pipeline in Canada exceed 35 percent; however at the minimum the U.S. shippers’ share will be the greater of either two-thirds of the cost of service or the proportion of contracted Alaskan gas in relation to all contracted gas carried in the Pipeline. The proportion of the cost of service borne by U.S. shippers in Zone 11 will be reduced should overruns on the cost of construction in that Zone exceed 35 percent after allowance for the benefits to U.S. shippers derived from Pipeline construction cost savings in other Zones. Notwithstanding the foregoing, at the minimum, the U.S. shippers’ shre will be the greater of either two-thirds of the cost of service or the proportion of contracted Alaskan gas in relation to all contracted gas carried in the Pipeline. Details of this allocation of cost of service are set out in Annex III.

(c) Notwithstanding the principles in subparagraphs (a) and (b), in the event that the total volume of gas offered for shipment exceeds the efficient capacity of the Pipeline, the method of cost allocation for the cost of service for shipments of Alaskan gas (minimum entitlement 2.4 bcfd) or Northern Canadian gas (minimum entitlement 1.2 bcfd) in excess of the efficient capacity of the Pipeline will be subject to review and subsequent agreement by both Governments; provided however that shippers of either country may transport additional volumes without such review and agreement, but subject to appropriate regulatory approval, if such transportation does not lead to a higher cost of service or share of Pipeline fuel requirements attributable to shippers of the other country.

(d) It is agreed that Zone 11 costs of service allocated to U.S. shippers will not include costs additional to those attributable to a pipe size of 42 inches. It is understood that in Zones 10 and 11 the Dempster Line will be of the same gauge and diameter and similar in other respects, subject to differences in terrain. Zone 11 costs will include only facilities installed at the date of issuance of the leave to open order, or that are added within three years thereafter.

7. Supply of Goods and Services

(a) Having regard to the objectives of this Agreement, each Government will endeavor to ensure that the supply of goods and services to the Pipeline project will be on generally competitive terms. Elements to be taken into account in weighing competitiveness will include price, reliability, servicing capacity and delivery schedules.

(b) It is understood that through the coordination procedures in paragraph 8 below, either Government may institute consultations with the other in particular cases where it may appear that the objectives of subparagraph (a) are not being met. Remedies to be considered would include the renegotiation of contracts or the reopening of bids.

8. Coordination and Consultation

Each Government will designate a senior official for the purpose of carrying on periodic consultations on the implementation of these principles relating to the construction and operation of the Pipeline. The designated senior officials may, in turn, designate additional representatives, to carry out such consultations, which representatives, individually or as a group, may make recommendations with respect to particular disputes or other matters, and may take such other action as may be mutually agreed, for the purpose of facilitating the construction and operation of the Pipeline.

9. Regulatory Authorities: Consultation

The respective regulatory authorities of the two Governments will consult from time to time on relevant matters arising under this Agreement, particularly on the matters referred to in paragraphs 4, 5 and 6, relating to tariffs for the transportation of gas through the Pipeline.

10. Technical Study Group on Pipe

(a) The Governments will establish a technical study group for the purpose of testing and evaluating 54-inch 1,120 pounds per square inch (psi), 48-inch 1,260 psi and 48-inch 1,680 psi pipe or any other combination of pressure and diameter which would achieve safety, reliability and economic efficiency for operation of the Pipeline. It is understood that the decision relating to pipeline specifications remains the responsibility of the appropriate regulatory authorities.

(b) It is agreed that the efficient pipe for the volumes contemplated (including reasonable provision for expansion), subject to appropriate regulatory authorization, will be installed from the point of interconnection of the Pipeline with the Dempster Line near Whitehorse to the point near Caroline, Alberta, where the Pipeline bifurcates into a western and an eastern leg.

11. Direct Charges by Public Authorities

(a) Consultation will take place at the request of either Government to consider direct charges by public authorities imposed on the Pipeline where there is an element of doubt as to whether such charges should be included in the cost of service.

(b) It is understood that the direct charges imposed by public authorities requiring approval by the appropriate regulatory authority for inclusion in the cost of service will be subject to all of the tests required by the appropriate legislation and will include only

(i) those charges that are considered by the regulatory authority to be just and reasonable on the basis of accepted regulatory practice, and

(ii) those charges of a nature that would normally be paid by a natural gas pipeline in Canada. Examples of such charges are listed in Annex IV.

12. Other Costs

It is understood that there will be no charges on the Pipeline having an effect on the cost of service other than those:

(i) imposed by a public authority as contemplated in this Agreement or in accordance with the Transit Pipeline Treaty, or

(ii) caused by Acts of God, other unforeseen circumstances, or

(iii) normally paid by natural gas pipelines in Canada in accordance with accepted regulatory practice.

13. Compliance with Terms and Conditions

The principles applicable directly to the construction, operation and expansion of the Pipeline will be implemented through the imposition by the two Governments of appropriate terms and conditions in the granting of required authorizations. In the event of subsequent non-fulfilment of such a term or condition by an owner of the Pipeline, or by any other private person, the two Governments will not have responsibility therefor, but will take such appropriate action as is required to cause the owner to remedy or mitigate the consequences of such non-fulfilment.

14. Legislation

The two Governments recognize that legislation will be required to implement the provisions of this Agreement. In this regard, they will expeditiously seek all required legislative authority so as to facilitate the timely and efficient construction of the Pipeline and to remove any delays or impediments thereto.

15. Entry Into Force

This Agreement will become effective upon signature and shall remain in force for a period of 35 years and thereafter until terminated upon 12 months’ notice given in writing by one Government to the other, provided that those provisions of the Agreement requiring legislative action will become effective upon exchange of notification that such legislative action has been completed.

IN WITNESS WHEREOF the undersigned representatives, duly authorized by their respective Governments, have signed this Agreement.

DONE in duplicate at Ottawa in the English and French languages, both versions being equally authentic,his twentieth day of September 1977.

Allan J. MacEachen

For the Government of Canada

James R. Schlesinger

For the Government of the United States of America

Annex I

The Pipeline Route

In Alaska:

The Pipeline constructed in Alaska by Alcan will commence at the discharge side of the Prudhoe Bay Field gas plant facilities. It will parallel the Alyeska oil pipeline southward on the North Slope of Alaska, cross the Brooks Range through the Atigun Pass, and continue on to Delta Junction.

At Delta Junction, the Pipeline will diverge from the Alyeska oil pipeline and follow the Alaska Highway and Haines oil products pipeline passing near the towns of Tanacross, Tok, and Northway Junction in Alaska. The Alcan facilities will connect with the proposed new facilities of Foothills Pipe Lines (South Yukon) Ltd. at the Alaska-Yukon border.

In Canada:

In Canada the Pipeline will commence at the Boundary of the State of Alaska and the Yukon Territory in the vicinity of the towns of Border City, Alaska and Boundary, Yukon. The following describes the general routing of the Pipeline in Canada:

From the Alaska-Yukon border, the Foothills Pipe Lines (South Yukon) Ltd. portion of the Pipeline will proceed in a southerly direction generally along the Alaska Highway to a point near Whitehorse, Yukon, and thence to a point on the Yukon-British Columbia border near Watson Lake, Yukon where it will join with the Foothills Pipe Lines (North B.C.) Ltd. portion of the Pipeline.

The Foothills Pipe Lines (North B.C.) Ltd. portion of the Pipeline will extend from Watson Lake in a southeasterly direction across the northeastern part of the Province of British Columbia to a point on the boundary between the Provinces of British Columbia and Alberta near Boundary Lake where it will interconnect with the Foothills Pipe Lines (Alta.) Ltd. portion of the Pipeline.

The Foothills Pipe Lines (Alta.) Ltd. portion of the Pipeline will extend from a point on the British Columbia-Alberta boundary near Boundary Lake in a southeasterly direction to Gold Creek and thence parallel to the existing right-of-way of The Alberta Gas Trunk Line Company Limited to James River near Caroline.

From James River a “western leg” will proceed in a southerly direction, generally following the existing right-of-way of The Alberta Gas Trunk Line Company Limited to a point on the Alberta-British Columbia boundary near Coleman in the Crow’s Nest Pass area. At or near Coleman the Foothills Pipe Lines (Alta.) Ltd. portion of the Pipeline will interconnect with the Foothills Pipe Lines (South B.C.) Ltd. portion of the Pipeline.

The Foothills Pipe Lines (South B.C.) Ltd. portion of the Pipeline will extend from a point on the Alberta-British Columbia boundary near Coleman in a southwesterly direction across British Columbia generally parallel to the existing pipeline facilities of Alberta Natural Gas Company Ltd. to a point on the International Boundary Line between Canada and the United States of America at or near Kingsgate in the Province of British Columbia where it will interconnect with the facilities of Pacific Gas Transmission Company.

Also, from James River, an “eastern leg” will proceed in a southeasterly direction to a point on the Alberta-Saskatchewan boundary near Empress, Alberta where it will interconnect with the Foothills Pipe Lines (Sask.) Ltd. portion of the Pipeline. The Foothills Pipe Lines (Sask.) Ltd. portion of the Pipeline will extend in a southeasterlyirection across Saskatchewan to a point on the International Boundary Line between Canada and the United States of America at or near Monchy, Saskatchewan where it will interconnect with the facilities of Northern Border Pipeline Company.

Annex Ii

Zones for the Pipeline and the Dempster Line in Canada

Zone 1 Foothills Pipe Lines (South Yukon) Ltd.

Alaska Boundary to point of interconnection with the Dempster Line at or near Whitehorse.

Zone 2 Foothills Pipe Lines (South Yukon) Ltd.

Whitehorse to Watson Lake.

Zone 3 Foothills Pipe Lines (North B.C.) Ltd.

Watson Lake to point of interconnection with Westcoast’s main pipeline near Fort Nelson.

Zone 4 Foothills Pipe Lines (North B.C.) Ltd.

Point of interconnection with Westcoast’s main pipeline near Fort Nelson to the Alberta-B.C. border.

Zone 5 Foothills Pipe Lines (Alta.) Ltd.

Alberta-B.C. border to point of bifurcation near Caroline, Alberta.

Zone 6 Foothills Pipe Lines (Alta.) Ltd.

Caroline, Alta. to Alberta-Saskatchewan border near Empress.

Zone 7 Foothills Pipe Lines (Alta.) Ltd.

Caroline to Alberta-B.C. border near Coleman.

Zone 8 Foothills Pipe Lines (South B.C.) Ltd.

Alberta-B.C. border near Coleman to B.C.-United States border near Kingsgate.

Zone 9 Foothills Pipe Lines (Sask.) Ltd.

Alberta-Saskatchewan border near Empress to Saskatchewan-United States border near Monchy.

Zone 10 Foothills Pipe Lines (North Yukon) Ltd.

Mackenzie Delta Gas fields in the Mackenzie Delta, N.W.T., to a point near the junction of the Klondike and Dempster Highways just east of Dawson, Yukon Territory.

Zone 11 Foothills Pipe Lines (South Yukon) Ltd.

A point near the junction of the Klondike and Dempster Highways near Dawson to the connecting point with the Pipeline at or near Whitehorse.

Annex Iii*

Cost Allocation in Zone 11

The cost of service in Zone 11 shall be allocated to United States shippers on the following basis:

(i) There will be calculated, in accordance with (iii) below, a percentage for Zones 1 — 9 in total by dividing the actual capital costs by filed capital costs and multiplying by 100. If actual capital costs are equal to or less than 135% of filed capital costs, then United States shippers will pay 100% of the cost of service in Zone 11. If actual capital costs in Zones 1 — 9 are between 135% and 145% of filed capital costs, then the percentage paid by United States shippers will be adjusted between 100% and 66 2/3% on a straight-line basis, except that in no case will the portion of cost of service paid by Unite States shippers be less than the proportion of the contracted volumes of Alaskan gas at the Alaska-Yukon border to the same volume of Alaskan gas plus the contracted volume of Northern Canadian gas. If the actual capital costs are equal to or exceed 145% of filed capital costs, the portion of the cost of service paid by United States shippers will be not less than 66 2/3% or the proportion as calculated above, whichever is the greater.

(ii) There will be calculated a percentage for the cost overrun on the Dawson to Whitehorse lateral (Zone 11). After determining the dollar value of the overrun, there will be deducted from it:

(a) the dollar amount by which actual capital costs in Zones 1, 7, 8 and 9 (carrying Alaskan gas only) are less than 135% of filed capital costs referred to in (iii) below;

(b) in each of Zones 2, 3, 4, 5 and 6 the dollar amount by which actual capital costs are less than 135% of filed capital costs referred to in (iii) below, multiplied by the proportion that the U.S. contracted volume bears to the total contracted volume in that Zone.

If the actual capital costs in Zone 11, after making this adjustment, are equal to or less than 135% of filed capital costs, then no adjustment is required to the percentage of the cost of service paid by United States shippers as calculated in (i) above. If, however, after making this adjustment, the actual capital cost in Zone 11 is greater than 135% of the filed capital cost, then the proportion of the cost of service paid by United States shippers will be a fraction (not exceeding 1) of the percentage of the cost of service calculated in (i) above, where the numerator of the fraction is 135% of the filed capital cost and the denominator of the fraction is actual capital cost less the adjustments from (a) and (b) above. Notwithstanding the adjustments outlined above, in no case will the percentage of the actual cost of service borne by United States shippers be less than the greater of 66 2/3% or the proportion of the contracted volumes of Alaskan gas at the Alaska-Yukon border to the same volume of Alaskan gas plus the contracted volume of Northern Canadian gas.

(iii) The “filed capital cost” to be applied to determine cost overruns for the purpose of cost allocation in (i) and (ii) above will be:


“Filed Capital Cost” Estimates for the Pipeline in Canada (millions of Canadian dollars)
The Pipeline in Canada (Zone 1-9)*
   48″ — 1,260 lb. pressure pipeline — 3,873   
or 48″ — 1,680 lb. pressure pipeline — 4,418   
or 54″ — 1,120 lb. pressure pipeline — 4,234   
These filed capital costs include and are based upon (a) a 1,260 psi, 48-inch line from the Alaska-Yukon border to the point of possible interconnection near Whitehorse; (b) a 1,260 psi, 48-inch; or 1,680 psi, 48-inch; or 1,120 psi, 54-inch line from the point of possible interconnection near Whitehorse to Caroline Junction; (c) a 42-inch line from Caroline Junction to the Canada-Unitedtates border near Monchy, Saskatchewan; and (d) a 36-inch line from Caroline Junction to the Canada-United States border near Kingsgate, British Columbia. These costs are escalated for a date of commencement of operations of January 1, 1983.
Whitehorse to Dawson —705
“Filed Capital Cost” Estimates for the Pipeline in Canada (millions of Canadian dollars)
Zone 11 of the Dempster Line*
  30″ — Section of Dempster line
from
Whitehorse to Dawson — 549
or 36″ — Section of Dempster line
from
Whitehorse to Dawson — 585
or 42″ — Section of Dempster line
from

Details for Zones 1-9 are shown in the following table:


Filed Capital Costs for the Pipeline in Canada
48″ 48″ 54″
1,260 psi 1,680 psi 1,120 psi
$ million $ million $ million
Zone (Canadian) (Canadian) (Canadian)
1 707 707 707
2 721 864 805
3 738 850 803
4 380 488 456
5 677 859 813
6 236 236 236
7 126 126 126
8  83  83  83
9**   205     205     205  
Total Zones 1-93,873 4,418 4,234 

It is recognized that the above are estimates of capital costs. They do not include working capital, property taxes or the provision for road maintenance in the Yukon Territory (not to exceed $30 million Canadian).

If at the time construction is authorized, both Governments have agreed to a starting date for the operation of the Pipeline different from January 1, 1983, then the capital cost estimates shall be adjusted for the difference in time using the GNP price deflator from January 1, 1983. Similarly at the time construction is authorized for the Dempster Line, if the starting date for the operation agreed to by the Canadian Government is different from January 1, 1985, then the capital cost estimate shall be adjusted for the difference in timing using the GNP price deflator from January 1, 1985. The diameter of the pipeline in Zone 11, for purposes of cost allocation, may be 30″, 36″, or 42″, so long as the same diameter pipe is used from the Delta to Dawson (Zone 10).

The actual capital cost, for purposes of this Annex, shall be the booked cost as of the date “leave to open” is granted plus amounts still outstanding to be accrued on a basis to be approved by the National Energy Board. Actual capital costs shall exclude working capital, property taxes, and direct charges for road maintenance of up to $30 million Canadian in the Yukon as specifically provided herein.

For purposes of this Annex, actual capital costs will exclude the effect of increases in cost or delays caused by actions attributable to the U.S. shippers, related U.S. pipeline companies, Alaskan producers, the Prudhoe Bay deliverability or gas conditioning plant construction and the United States or State Governments. If the appropriate regulatory bodies of the two countries are unable to agree upon the amount of such costs to be excluded, the determination shall be made in accordance with the procedures set forth in Article IX of theransit Pipeline Treaty.

The filed capital costs of facilities in Zones 7 and 8 will be included in calculations pursuant to this Annex only to the extent that such facilities are constructed to meet the requirements of U.S. shippers.


Addendum

(Resulting from an exchange of notes dated June 6, 1978 between the Governments of Canada and the United States of America)

The filed capital costs specified in Annex III shall be deemed to include all normal pipeline costs incurred in constructing gas pipeline facilities in Canada, except those specifically excluded in the provisions of the Annex, and include such items as an allowance for funds used during construction. The filed capital costs in Annex III shall also be deemed to include an allowance on and recovery of regulatory monitoring costs.

The following additions shall be made to the tabulations contained in Part (iii) of Annex III:

(A) To the table captioned: “ ‘Filed Capital Costs’ Estimates for the Pipeline in Canada (millions of Canadian dollars): The Pipeline in Canada (Zones 1-9)”, insert as line four the following phrase:

“or 56″ — 1,080 lb. pressure pipeline — 4,325”

(B) Footnote 1, subpart (b) to the said table shall be modified to read in its entirety:

“(b) a 1,260 psi, 48-inch; or 1,680 psi, 48-inch; or, 1,120 psi, 54-inch; or 1,080 psi, 56-inch line from the point of possible interconnection near Whitehorse to Caroline Junction;”

(C) To the table captioned: “Filed Capital Costs for the Pipeline in Canada”, add an additional column as follows:


“56″
1,080 psi
$ million
(Canadian)
707
817
874
427
850
236
126
 83
  205  
4,325”

Annex Iv

Direct Charges by Public Authorities


14.Costs of surveillance and related studies as required by regulatory bodies or applicable laws.
*1. Crossing damages (roads, railroad crossings, etc.; this item is usually covered in the crossing permit).
*2. Road damages caused by exceeding design load limits.
*3. Required bridge reinforcements caused by exceeding design load limits.
 4. Airfield and airstrip repairs.
 5. Drainage maintenance.
 6. Erosion control.
 7. Borrow pit reclamation.
 8. Powerline damage.
 9. Legal liability for fire damage.
10. Utility system repair (water, sewer, etc.).
11. Camp waste disposal.
12. Camp site reclamation.
13. Other items specified in environmental stipulations.

Annex V


Statement by the Government of the Province of Alberta

The Government of the Province of Alberta agrees in principle to the provisions contained in the Canada-United States Pipeline Treaty of January 28, 1977, and furthermore, Alberta is prepared to cooperate with the Federal Government to ensure that the provisions of the Canada-United States Treaty, with respect to non-interference of throughput and non-discriminatory treatment with respect to taxes, fees, or other monetary charges on either the Pipeline or throughput, are adhered to. Specific details of this undertaking will be the subject of a Federal-Provincial Agreement to be negotiated when the Canada-United States protocol or understanding has been finalized.


Statement by the Government of the Province of Saskatchewan

The Government of Saskatchewan is willing to cooperate with the Government of Canada to facilitate construction of the Alcan Pipeline through southwestern Saskatchewan and, to that end, the Government of Saskatchewan expresses its concurrence with the principles elaborated in the Transit Pipeline Agreement signed between Canaa and the United States on January 28, 1977. In so doing, it intends not to take any discriminatory action towards such pipelines in respect of throughput, reporting requirements, and environmental protection, pipeline safety, taxes, fees or monetary charges that it would not take against any similar pipeline passing through its jurisdiction. Further details relating to Canada-Saskatchewan relations regarding the Alcan Pipeline will be the subject of Federal-Provincial agreements to be negotiated after a Canada-United States understanding has been finalized.


Statement by the Government of the Province of British Columbia

The Government of the Province of British Columbia agrees in principle to the provisions contained in the Canada-United States Pipeline Treaty of January 28, 1977, and furthermore British Columbia is prepared to cooperate with the Federal Government to ensure that the provisions of the Canada-United States Treaty, with respect to non-interference of throughput and non-discriminatory treatment with respect to taxes, fees or other monetary charges on either the Pipeline or throughput, are adhered to. Specific details of this undertaking will be the subject of a Federal-Provincial Agreement to be negotiated at as early a date as possible. Such agreement should guarantee that British Columbia’s position expressed in its telex of August 31 is protected.

1977-78, c. 20, Sch. I.

Schedule Ii

(Section 21)

Companies

Foothills Pipe Lines (South Yukon) Ltd.

Foothills Pipe Lines (North B.C.) Ltd.

Foothills Pipe Lines (South B.C.) Ltd.

Foothills Pipe Lines (Alta.) Ltd.

Foothills Pipe Lines (Sask.) Ltd.

1977-78, c. 20, Sch. II.

Schedule Iii

(Sections 21 and 22)

Terms And Conditions


Ownership Of Pipeline

1. The pipeline shall be the property of and shall be operated by the company.


Design And Construction

2. Subject to condition 18, the company shall cause the pipeline to be designed, manufactured, located, constructed, installed and operated in accordance with those specifications, drawings and other information or data set forth in the applications of Foothills Pipe Lines (Yukon) Ltd., the Alberta Gas Trunk Line (Canada) Limited, Westcoast Transmission Company Limited, and Alberta Natural Gas Company Limited and in the submission of The Alberta Gas Trunk Line Company Limited to the Board, as amended during the Hearing and in the undertakings given by those companies during the Hearing or as ordered, directed or approved by the designated officer and no design, specification, location, drawing or other information or data shall be varied except as ordered, directed or approved by the designated officer.

3. Without limiting the generality of condition 2, the company shall submit to the designated officer

(a) information satisfactory to him in support of final detailed design, including the results of field tests and experiments and analyses thereof;

(b) the final detailed design of each section or part of the pipeline for his approval;

(c) before construction commences, detailed construction specifications and procedures, as well as inspection procedures satisfactory to the designated officer; and

(d) a schedule for project control, using a scheduling system acceptable to the Agency, which schedule shall

(i) govern the company’s activities that can reasonably be anticipated in connection with the project,

(ii) include schedules for regulatory reviews and approvals, and

(iii) be updated at thirty day intervals or as otherwise requested by the Agency.

4. The company shall not commence construction of a section or part of the pipeline until the designated officer has given the approval of the final design of that section or part as required by paragraph (b) of condition 3.

5. The company shall file with the designated officer, forthwith after execution, every contract between the company and the principal construction contractors and every substantive amendment thereto.

6. Every contract referred to in condition 5 shall contain a clause requiring the construction contractor to file with the company, forthwith after execution of that contract,

(a) a copy of every collective agreement between the construction contractor and a union that is in effect as of the day the contract referred to in condition 5 is entered into;

(b) a copy of every amendment to a collective agreement referred to in paragraph (a);

(c) a copy of every collective agreement and amendment thereto that is entered into subsequent to a collective agreement referred to in paragraph (a) during the term of the contract referred to in condition 5,

and the company shall file a copy of every such collective agreement and amendment thereto with the designated officer forthwith after the copy is filed with the company.

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Social, Economic And Environmental Matters

7. The company shall, in respect of social and economic matters and environmental, fisheries and agricultural concerns, comply with the undertakings given by Foothills Pipe Lines (Yukon) Ltd., The Alberta Gas Trunk Line (Canada) Limited, Westcoast Transmission Company Limited, and Alberta Natural Gas Company Ltd. and in the submission of The Alberta Gas Trunk Line Company Limited to the Board, as amended during the Hearing or such orders or directions as may be made or given by the designated officer.

8. Prior to the approval of the final detailed design of each section or part of the pipeline, the company shall submit to the designated officer

(a) the results of such further studies in respect of social and economic matters, environmental, fisheries and agricultural concerns as may be ordered or directed by the designated officer; and

(b) the recommendations of its environmental consultants for the protection of fisheries, farm lands and the environment.


Manpower And Procurement

9. With respect to the use of Canadian labour,

(a) the company shall submit to the Minister, on or before a date to be fixed by him, a detailed manpower plan designed to ensure the maximum possible use of Canadian labour in the planning, construction and operation of the pipeline;

(b) subject to any amendment approved by the Minister, the manpower plan referred to in paragraph (a), when approved by the Minister, constitutes the company’s manpower plan, and the company shall comply therewith.

10. With respect to Canadian participation and content,

(a) the company shall design a program for the procurement of all goods and services for the pipeline that ensures that

(i) Canadians have a fair and competitive opportunity to participate in the supply of goods and services for the pipeline,

(ii) the level of Canadian content is maximized so far as practicable, with respect to the origin of products, services and their constituent components,

(iii) maximum advantage is taken of opportunities provided by the pipeline to establish and expand suppliers in Canada that can make a long term contribution to the Canadian industrial base, and

(iv) maximum advantage is taken of opportunities provided by the pipeline to foster research, development and technological activities in Canada;

(b) the company shall submit to the Minister, in such detail as may be required by the Minister and on or before a date to be fixed by him, a report setting out

(i) the program referred to in paragraph (a), and

(ii) the procedures that the company proposes to follow in order to implement that program including such procedures as the Minister may require respecting prior approval by the designated officer in respect of proposed contracts or classes of contracts specified by the Minister and including procedures to ensure to the Minister’s satisfaction that proposed contracts for the supply of goods or services from outside Canada will not involve unfair trade practices;

(c) subject to any amendment approved by the Minister, the report referred to in paragraph (b), when approved by the Minister, constitutes the company’s procurement policy and procedures and the company shall comply therewith; and

(d) prior to the submission and approval of the report referred to in paragraph (b), the company shall make no major puchases without prior approval of the Minister.

11. The company shall provide the Minister and the Board, prior to the execution thereof, with copies of every proposed contract for the procurement of goods or services that require the prior approval of the designated officer under the procedures referred to in condition 10(b)(ii).


Financing

12. (1) The company shall, before the commencement of construction of the pipeline,

(a) file with the Minister and the Board evidence that the company has been incorporated in Canada and is not a non-eligible person within the meaning of the Foreign Investment Review Act, chapter 46 of the Statutes of Canada, 1973-74, as that expression was defined in that Act on April 13, 1978;

(b) establish to the satisfaction of the Minister and the Board that financing has been obtained for that portion of the pipeline, hereinafter referred to as the prebuilt sections, that will be used for the transmission of Canadian natural gas to the United States prior to the completion of the pipeline;

(c) establish to the satisfaction of the Minister and the Board that financing of that portion of the pipeline other than the prebuilt sections, hereinafter referred to as the northern section, can be obtained to enable the pipeline to be completed before the end of 1985 and that protection can be provided against risk of noncompletion of the pipeline and interruption of construction on a basis acceptable to the Minister and the Board; and

(d) file with the Minister and the Board documents relating to the financing obtained for the prebuilt sections and such documents shall include all relevant contracts and instruments.

(2) The company shall, before commencing construction of that portion of the pipeline other than the prebuilt sections,

(a) establish to the satisfaction of the Minister and the Board that financing has been obtained for the northern section and such financing includes protection against risk of noncompletion of the pipeline and interruption of construction on a basis acceptable to the Minister and the Board;

(b) file with the Minister and the Board all documents relating to the financing of the pipeline not already filed pursuant to paragraph 12(1)(d); and

(c) provide evidence to the Minister and the Board that debt instruments issued in connection with the financing of the pipeline do not contain a provision requiring the consent of the holders of those debt instruments to the financing of the construction of the Dempster Line referred to in the Agreement or any other provision, apart from normal trust indenture provisions generally applicable in the pipeline industry, that would prohibit, limit or inhibit the financing of the construction of the Dempster Line.

13. The company shall file with the Minister and the Board forthwith after execution contracts between producers and shippers and between shippers and the company and substantive amendments to those contracts.

14. The company shall provide the Minister and the Board, in a form satisfactory to the Minister and the Board and on a quarterly basis, information on the

(a) costs incurred and projected in respect of the pipeline;

(b) financing of the pipeline; and

(c) progress of the planning and construction of, and procurement for, the pipeline.

15. The Minister and the Board shall have access to all financial records of the company for audit purposes.

16. The company shll

(a) submit to the Minister and the Board detailed costs estimates based on the final design of each section or part of the pipeline in a form satisfactory to the Board; and

(b) provide, before operation commences, an operations and safety manual satisfactory to the Board.


General

17. Prior to commencing the construction of any section or part of the pipeline, the company shall provide the Minister and the Board with such proof as the Minister and the Board consider appropriate that the company has obtained all necessary regulatory approvals.

18. The company shall cause the pipe for the pipeline to be of such specifications, including diameter, wall thickness and maximum allowable operation pressures as may be approved by the Minister and the Board.

19. When the company ascertains the lands of a landowner that may be required for the purposes of a section or part of the pipeline, the company shall serve a notice, in a manner and in a form to be determined by the designated officer, on the landowner, which notice shall set out the location of the offices of the Agency and the right of the landowner within thirty days of being served to make representations to the Agency respecting the final route of the pipeline for its consideration prior to its approval of the final detailed route.


Remote Communities

20. The company shall, in implementing paragraph 3(b) of the Agreement, construct laterals from the pipeline and make arrangements for the supply of gas to remote communities in Yukon and the provinces through which the pipeline passes where the communities can be economically served and have applied to the appropriate authority for such service and that authority has approved such application, except that in Yukon, Foothills Pipe Lines (South Yukon) Ltd. shall make a financial contribution in respect of providing gas

(a) to the communities of Beaver Creek, Burwash Landing, Destruction Bay, Haines Junction, Whitehorse, Teslin, Upper Liard and Watson Lake, in an amount not to exceed a total cost of 2.5 million dollars; and

(b) to other remote communities, an amount not to exceed the lesser of

(i) the product of 2,500 dollars multiplied by the number of customers in the communities, and

(ii) a total cost of 2.5 million dollars.


Dempster Line

21. When the Dempster Line referred to in the Agreement is to be connected to the pipeline or when additional pipeline capacity is needed to meet the contractual requirements of United States or Canadian shippers, the company shall expand the capacity of the pipeline, subject to the regulatory requirements of the Board, and to any agreement that may be entered into between Her Majesty in right of Canada and the company, in an efficient manner to permit the connection of the Dempster Line or to meet those contractual requirements, as the case may be.

R.S., 1985, c. N-26, Sch. III; 2002, c. 7, s. 218.

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